The Benefit Cap and Employment

The government is introducing a cap on the level of benefits that each household receives. Individuals will become exempt from the benefit cap if they can find work of 16 hours a week or more. This briefing looks at what London boroughs are doing to support those affected by the cap to find work and the challenges to provide co-ordinated, effective support for them.

Overview

The government introduced a cap on the level of benefits working age people will receive through the Welfare Reform Act(^1) in March 2012. Under the recently announced revised timetable, the cap will come into force in four pilot authorities (all located in London(^2)) on 15 April 2013. It will be rolled out nationally in the coming months, most likely before October 2013, although the government has not announced a specific date.

The Department for Work and Pensions (DWP) estimates that 27,000 households in London will be affected by the cap, around half of all affected households nationally. Across London boroughs, the number of households estimated as affected varies from less than 150 in Richmond and Sutton to over 2,800 households in Brent. There is also a large variation in the amount of benefit reduction among households – from less than £10 a week to over £250. The average shortfall is currently estimated at £93 per week.

Crucially households will be exempt from the benefits cap if anyone in that household is eligible for Working Tax Credit – that is, they are working for at least 16 hours a week or up for 24 hours a week for a couple household. For people who have been in work for over a year and lose their job, there will be a grace period of 39 weeks when the benefit cap will not be applied to the household.

Analysis

The DWP has written twice to all benefit claimants that will currently be affected by the cap – the latter letter with an estimate of by how much benefit they will lose. The response from claimants to these letters has been very low and awareness of the changes among benefit claimants is also very low.

Consequently, many boroughs are proactively contacting affected households in order to discuss their housing options, provide support around money and/or debt management and offer employment support. There is a clear business case for London boroughs to pro-actively work with affected households – should a household become homeless, the council will need to meet this cost; the council also has a duty to find other affordable accommodation if a

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(^1) The cap is set at £500 per week for couples and lone parents and £350 per week for single adults

(^2) The London pilot authorities are: Bromley, Croydon, Enfield and Haringey household needs to move. Early contact with affected Londoners will allow for preventative work with those that need it.

London boroughs are well placed to take a leading role in developing support for these households, as community leaders, providers of housing and other provision and administrators of housing benefit. Many have set up multi-agency taskforces to develop local support, typically including:

- Housing options – working closely with Registered Social Landlords (RSLs), Money Advice and the Citizens Advice Bureau (CAB)
- Employment support – drawing on local employment programmes, additional support bought in by Jobcentre Plus (JCP), extra JCP advisor capacity and the Work Programme and other mainstream programmes
- Financial support - around budgeting and debt management, often provided by third sector specialist providers.

Support is often available locally. The key challenge is developing co-ordinated support from a range of different agencies, that is responsive enough to meet the needs of individual households but does not result in multiple approaches or interventions – all within a tight timescale.

Given the timescale and the numbers involved, boroughs and local partners are likely to need to agree a focus for their employment support – for example, individuals best equipped to get a job; those willing to seek work and those for whom employment is only option if they want to stay in their current accommodation.

Below are examples of how some boroughs have been approaching the challenge of providing employment support to households affected by the cap:

**Tower Hamlets:** With at least 1,600 households affected by the benefits cap, Tower Hamlets established a Welfare Reform Taskforce, including Housing Benefits, Housing Options, Social Services, Employment Services and Communications departments within the Council, alongside third sector agencies and Jobcentre Plus. The taskforce is overseeing a twin track approach:

1. Written correspondence to all claimants affected by the cap. This includes signposting to local employment support services and money management advice;
2. Outreach visits for those households judged at a long term risk of homelessness; made initially by both housing and local employment advisors. Employment is identified as a way to avoid the cap and an employment questionnaire is filled in. Follow up action is agreed between the local employment advisor and JCP advisor. Housing advisors were trained to complete the employment questionnaire with residents and refer to the council’s employment service.

Additionally, households living in council and housing association properties affected by the cap have been contacted directly by their landlords.

**Lewisham:** The borough is a national pilot for developing face-to-face support for the transition to Universal Credit but will test out this approach on residents affected by the benefit cap. Lewisham has developed an assessment tool to establish whether a household is vulnerable to the changes in benefit – based on financial inclusion, digital inclusion, employment support and housing support. If assessed as vulnerable, the household needs will be more fully assessed and a package of support developed that draws on local services and partners. Lewisham has now established a team within the council to carry out assessments; this includes a secondee from Jobcentre Plus. Commentary

Providing effective employment support, as part of a wider package of support for households affected by the cap, is a challenging but necessary task. It is one where London boroughs should be leading. It also requires close collaboration between local government, government departments, particularly DWP, and national and local providers of services. The timescales mean that large, sometimes bureaucratic organisations will need to move quickly and nimbly. Key issues that have arisen so far include:

Co-location and joint outreach work: Many boroughs want to co-locate their support with JCP or agree to joint outreach arrangements with JCP to support households, so provision is aligned. This will need much speedier decisions from JCP to set up these arrangements than has occurred in the past.

Data sharing: Boroughs have received information from DWP on which households are affected and by how much – this needs to be accurate and timely. Boroughs also need access to some data shared with other agencies. For example, DWP information passed to Work Programme providers about which of their customers are affected by the cap. This should be shared with boroughs, so that local support can be targeted effectively.

Messaging and marketing: The messaging around the benefit cap needs to be co-ordinated at local, regional and national levels between agencies. It is vital that the messages are clear and consistent, but also effective – and get people to seek support if they need it.

Gaps in provision: While much of the support needed exists as mainstream provision, there is concern about access to ESOL and childcare provision. Many affected Londoners will have language and literacy issues and often have two or more children. If these cannot be dealt with effectively and swiftly, they will remain significant barriers to getting into work.

In order to deal with these issues speedily and effectively, London Councils is working with DWP, the Department for Communities and Local Government (DCLG), London boroughs and JCP to establish a time-limited London taskforce to oversee employment support offered to Londoners affected by the cap and make sure it is effective as possible.

If London boroughs can take the lead and provide effective employment support, working closely with government, private and third sector providers, it could provide some valuable lessons in how employment services in London might be better co-ordinated and made more effective locally.

Author: Dianna Neal, Head of Economy, Culture and Tourism (T: 020 7934 9819) Click here to send a comment or query to the author

Links:

Welfare Reform Act 2012 Does the Cap Fit? An analysis of the impact of welfare reform in London

This member briefing has been circulated to: Portfolio holders and those members who requested policy briefings in the following categories: Economic Development, Housing, Children & Young People, Health & Adult Social Services